Feb. 25 (Bloomberg) -- Goldman Sachs Group Inc. is in talks
with its Tokyo landlord to cut office space as it seeks to
reduce expenses, said two people with knowledge of the matter.

The Wall Street firm, which rents six floors of the Mori
Tower in the Roppongi Hills office complex, is in discussions
with Mori Building Co. to vacate two levels, the people said,
asking not to be named as the talks are private.

Goldman Sachs joins investment banks including Nomura
Holdings Inc. in reducing costs in Japan after companies shunned
the stock market for fundraising amid a recession that may be
ending. The plan to trim office space comes even as rents in
Tokyo decline to a record low.

The U.S. bank plans to leave the 43rd and 44th floors,
which house its asset management unit and sports facilities, and
remain in the 45th to 48th, the people said. It will transfer
staff to other floors of the 54-story building, one of the
people said.

“This is part of a planning process to optimize our
space,” Goldman Sachs said in a statement e-mailed to Bloomberg
News, declining to comment further. Hideki Nomura, general
manager of public relations at Mori Building, Japan’s biggest
closely held developer, declined to comment.

Goldman Sachs has about 1,200 employees in Japan as of this
month, almost unchanged from a year earlier, said Hiroko
Matsumoto, a Tokyo-based spokeswoman.

Recovery Signs

Signs of a recovery in the country’s equity capital markets
are emerging as stocks rally and the yen weakens. Goldman Sachs
and Daiwa Securities Group Inc. were picked to manage the
government’s sale of a stake in Japan Tobacco Inc., according to
a regulatory filing today. The stake is valued at about 967
billion yen ($10.3 billion), based on today’s closing price,
making it the nation’s largest share offering since 2010.

Japanese companies sold 3.9 trillion yen of shares in 2011
and 2012 combined, less than 2010’s 5 trillion yen, according to
data compiled by Bloomberg. The world’s third-largest economy,
which contracted in each of the past three quarters, will expand
1.75 percent this quarter, according to the median estimate of
economists.

Goldman Sachs isn’t the only foreign bank adjusting its
office space in the Japanese capital. Citigroup Inc. will move
its local retail banking unit’s headquarters to the city’s
Shinjuku district from Shinagawa in 2014 to increase floor space
and cut costs, according to an internal memo obtained by
Bloomberg News in August.

Morgan Stanley

Morgan Stanley will move to the Otemachi financial district
from Ebisu in early 2014, the bank said in December, taking
advantage of declining rents and rising office vacancies.

Rents for offices in Tokyo’s five central wards have been
dropping since the global financial crisis in 2008, according to
Miki Shoji Co., an office brokerage company. They fell to a
record low in January.

Roppongi Hills is known for its information technology
companies, with Google Inc. and Gree Inc. among the tenants at
Mori Tower. Apple Inc. plans to move to Roppongi Hills from
Shinjuku as early as April, according to two people familiar
with the iPhone maker’s plan.

Apple plans to take one or two floors in the office tower
at Roppongi Hills, a $2.2 billion development owned by Mori
Building, the people said in January.